Advantage Data: Metals mining again firm as key junk market sectors rebound from recent slump

By Paul Deckelman

New York, Jan. 12 – The junk market moved higher for a fourth consecutive week – the first full trading week of 2015 – as it continued to recover from its early December two-week losing streak, according to sector-tabulated weekly bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

Before that upturn, the overall market had also been lower in four of the previous five weeks.

A subset of the 30 most significantly sized sectors (out of the total of 58 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe), as measured by the number of bond issuers, the collective number of issues tracked and their total face amount outstanding, showed 24 of those more substantial sectors closing in the black during the week ended Friday, with six sectors in the red. That was little changed from the previous week, ended Jan. 2, when 23 of the sectors had shown gains and seven posted losses.

In 2014, a majority of the sectors had been on the plus side in 38 weeks, versus 15 weeks in which more sectors were down than up.

The last day of that year, Dec. 31, fell on a Wednesday, followed by the high-yield market close for the New Year’s Day holiday on Jan. 1. As a result, the full week is counted for statistical purposes as having occurred in 2014, even though it finished up with the very inactive session on Friday, Jan. 2, since the first three trading days of the week had taken place in the old year – producing the anomaly of the 2014 reporting year thus having had 53 weeks.

In the latest week, the metals mining sector was the top performer for a second consecutive week, after having struggled for much of 2014. The oil and natural gas exploration and production sector was the single worst performer on the week.

Those two sectors also held those positions on a year-to-date basis; year-to-date returns after the first full week plus the Jan. 2 session largely reflected the key sectors’ weekly performance.

Index continues rebound

Other statistical indicators of general market performance meanwhile were mixed across the board for a second consecutive week versus where they had finished out the week before, after having been higher across the board for two straight weeks before that. Those higher weeks, in turn, had followed two successive weeks in early December on the downside.

The Merrill Lynch High Yield Master II index led the way upward, firming by 0.212% on the week as of Friday’s close.

It was the index’s fourth consecutive weekly gain, following the 0.123% advance during the week ended Jan. 2, as well as its 0.48% gain in the week ended Dec. 26 and before that, the 1.055% jump during the week ended Dec. 19 – one of the largest weekly gains seen during 2014.

The index had closed out 2014 with 36 weekly gains against 17 losses, counting the week ended Jan. 2 as having been included in a 53-week 2014, as noted above. Its cumulative return for that year as of the close on Wednesday, Dec. 31, stood at 2.503% – well down from the 7.419% at which it had closed out 2013.

Including the Jan. 2 session as well as this past week, the index’s year-to-date return for the new year so far as of Friday stood at 0.234%, its high point so far for the year.

Among its other components, Friday’s yield to worst stood at 6.638%, down from 6.652% the previous Friday, though up a little from its 2014 year-end 6.448% level.

Its spread to worst over comparable Treasury issues stood at 529 basis points, wider than the previous Friday’s 517 bps as well as the 513 bps on the last day of 2014.

Metals mining on top

Back on a sector-by-sector basis, Advantage Data meanwhile showed the metals mining sector (up 0.91%) as the top performer among the significantly sized sectors for a second consecutive week.

It had also been the best finisher in the week ended Jan. 2, when it had gained 0.39%.

Also showing strength in the latest week were paper manufacturing (up 0.79%), miscellaneous retail (up 0.62%), transportation equipment manufacturing (up 0.54%) and insurance carriers (up 0.53%).

The papermakers had also been among the Top Five best performers the previous week, when they returned 0.33%

Oil issues slide

On the downside, the oil and gas E&P sector (down 0.74%) had the single worst showing of any of the significantly sized sectors.

It had also been among the underachievers the week before, when the grouping had been down by 0.14%.

Other losers on the week included petroleum refining (down 0.41%), coal mining (down 0.30%), real estate (down 0.20%) and primary metals processing (down 0.16%).

The coal miners were thus among the Bottom Five worst finishers for an eighth successive week; during the week before, the sector had actually been the single worst-performing sector, tumbling by 1.61% that week.

Metals best, oils worst

As noted, the metals mining sector – repeating as the week’s best-performing large-sized sector – was also the top performer year to date after the first full trading week of 2015, with a 1.16% cumulative return.

The energy E&P sector, besides being the week’s worst finisher, as noted, was also at the bottom of the pile year to date, with a 0.84% cumulative loss.

The other best- and worst-performing year-to-date issues largely tracked their weekly gains and losses during the initial trading week.

© 2015 Prospect News.
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